Birmingham-based engineering giant IMI (IMI) posted a 35 per cent rise in first-half profit and said it expected further progress during the rest of the year.

Despite the difficult economic climate, it said many of its markets remained robust although its UK beverage business was likely to be challenged due to the difficulties faced by the pubs sector.

The company, based on Birmingham Business Park, makes drinks dispensing equipment and chief executive Martin Lamb said the decline in the drinks trade during the past 12 months had left the operation struggling.

“The decline in the pubs sector is severe because of the squeeze on consumer spending and this is not likely to improve in the immediate future and therefore our operation will suffer, that is inevitable,” he said.

However, the performance in the company’s Severe Services sector – which takes in the oil and gas supply industries – continues to flourish and shows little sign of a decline.

“Some parts of our business have seen the wind behind them and this is one of them,” said Mr Lamb. “The oil and gas sector is currently strong and this is having a favourable impact on our operations.”

To reflect the opportunities available, the company said there would be greater investment in this sector.

“We have a strong working relationship with our customers and we will continue to work with them to ensure that we meet their needs and continue to add value,” he added.

IMI, which also produces air conditioning and other industrial equipment, made a pre-tax profit in the six months to June 30 of £103.7 million, up from £76.8 million in the same period last year.

Revenue rose 17 per cent to £911 million from £781 million and the group increased its interim dividend by seven per cent to 8p per share.

Mr Lamb added that the company was looking to maintain a strong balance sheet allowing it to take advantage of increased acquisition opportunities.

“We see growth taking place both organically and through acquisition. We have £150 million at our disposal for potential acquisitions and although we have made none in the first half, we remain on the lookout for opportunities that can add value to our operation,” he said.

Meanwhile, the company said that it had not made any provision in its accounts against a US investigation into its Severe Service business.
Last year IMI came under investigation into possible irregular payments linked to contracts entered into by agents supporting the Severe Service operation.

IMI said at the time that it had contacted relevant authorities and hired external counsel and forensic accountants to conduct an independent investigation.

The investigation has been completed and a report is expected to be delivered to the US Department of Justice next month.It said the probe had identified “possible incidental breaches of US trade law” and that the company had incurred costs related to the investigation during the period of £2.7 million.

“At this stage, it is still not possible to assess the level of any fines, defence or other costs arising from any action which may be taken, or the timing of any such actions, and accordingly no provision has been made for them in these accounts,” IMI said in the statement.

“The company is hopeful matters can be resolved with the DoJ by the end of the first quarter next year.”

Mr Lamb said: “We would expect to get a final resolution by March next year.”

He said the company intended to draw a line under what had happened, adding that the agents involved no longer worked for the company.

“There was a disruption to trading but everything is back to normal now,” he said.

Elsewhere, the firm said its order book for the second half was healthy and it remained confident of further improvement, especially as ongoing cost reduction initiatives were expected to mitigate increases in the cost of raw materials and energy.